Metropolitan Washington Chapter, Associated Builders and Contractors, Inc. v. DC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 8, 2022 Decided March 14, 2023

No. 22-7014

METROPOLITAN WASHINGTON CHAPTER, ASSOCIATED

BUILDERS AND CONTRACTORS, INC.,

APPELLANT

v.

DISTRICT OF COLUMBIA, A MUNICIPAL CORPORATION AND

MURIEL E. BOWSER, IN HER OFFICIAL CAPACITY AS MAYOR OF

THE DISTRICT OF COLUMBIA,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:12-cv-00853)

Paul J. Kiernan argued the cause and filed the briefs for

appellant.

Graham E. Phillips, Deputy Solicitor General, Office of

the Attorney General for the District of Columbia, argued the

cause for appellees. With him on the brief were Karl A. Racine,

Attorney General at the time the brief was filed, Caroline S.

Van Zile, Solicitor General, and Ashwin P. Phatak, Principal

2

Deputy Solicitor General. Carl J. Schifferle, Assistant

Attorney General, entered an appearance.

Before: MILLETT and CHILDS, Circuit Judges, and

ROGERS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

ROGERS.

ROGERS, Senior Circuit Judge: Metropolitan Washington

Chapter, Associated Builders and Contractors, Inc. (“Metro

Washington”), a corporate trade organization representing

construction companies, brought this pre-enforcement

challenge to the constitutionality of the District of Columbia

First Source Employment Agreement Act of 1984, D.C. Code

§ 2-219.01 et seq. (as amended). The statute requires

contractors on D.C. government-assisted projects to grant

hiring preferences to D.C. residents. Metro Washington

appeals the district court’s Rule 12 dismissals of the claims

under the dormant Commerce Clause, U.S. Const. Art. I, § 8,

cl. 3, and the Privileges and Immunities Clause, id. Art. IV, §

2, cl. 1, and the grant of summary judgment to the District of

Columbia on the substantive due process claim, id. Amend. V.

For the following reasons, we affirm in part and we dismiss in

part.

I.

As amended in 2011, the statute requires the contractor on

“every . . . project or contract” that receives D.C. government

assistance “valued at $300,000 or more” to grant hiring

preferences to residents of the District and periodically submit

a compliance report to the D.C. Department of Employment

Services. The Workforce Intermediary Establishment and

Reform of First Source Amendment Act of 2011, D.C. Law 19-

84, 58 D.C. Reg. 11,170 (2011) (codified at D.C. Code § 2-

3

219.01 et seq.). The hiring and reporting obligations vary

depending on the value of government assistance and on

whether a “construction project or contract” is involved. See

D.C. Code § 2-219.03(e). For example, if the government

assistance is valued between $300,000 and $5,000,000, then

the contractor must agree “that at least 51% of the new

employees hired to work on the project or contract shall be

District residents.” Id. § 2-219.03(e)(1)(A). The District may

grant a waiver upon the contractor’s demonstrating a “good-

faith effort to comply.” Id. § 2-219.03(e)(2)(B)(i). When the

District determines that a good-faith waiver is not justified, it

may impose monetary penalties calibrated to the value of the

total labor costs of the project. Id. §§ 2-219.03(e)(4)(A), (B).

Repeated violations within a ten-year period can trigger

debarment from consideration for the award of government

projects for up to five years. Id. §§ 2-219.03(e)(4)(C), (D).

In 2012, Metro Washington, along with two construction

companies and four construction workers who were residents

of Maryland or Virginia, sued pursuant to 42 U.S.C. § 1983,

seeking “declaratory and injunctive relief against the Mayor

and the District of Columbia . . . to strike down as

unconstitutional the District’s First Source Employment Act

and to block its enforcement.” Compl. 2. They challenged the

Act’s constitutionality on various grounds, including that it

violated the dormant Commerce Clause, the Fifth Amendment,

and the Privileges and Immunities Clause. Id. ¶¶ 95–101, 102

–07, 116–20, 88–94. The District moved to dismiss the

complaint pursuant to Federal Rule of Civil Procedure

12(b)(6). The district court granted the motion with respect to

all but one of the claims. Metro. Washington Chapter v.

District of Columbia, 57 F. Supp. 3d 1, 32 (D.D.C. 2014). The

court ruled that the complaint failed to state a viable claim

under the dormant Commerce Clause and the Fifth

4

Amendment, id. at 26–28, 29, 31, while denying the motion as

to the Privileges and Immunities Clause claim, id. at 26.

After the District moved for judgment on the pleadings

pursuant to Federal Rule of Civil Procedure 12(c), the district

court sua sponte appointed amicus curiae to address the

applicability of the Privileges and Immunities Clause to the

District of Columbia. At a hearing on the District’s Rule 12(c)

motion, the district court ruled that “the Privileges and

Immunities Clause, per se, doe[s not] apply” to the District of

Columbia. But the court allowed the case to proceed in view

of amicus’s argument that the Due Process Clause of the Fifth

Amendment incorporates against the District of Columbia the

individual rights conferred by the Privileges and Immunities

Clause. Upon the filing of an amended complaint reflecting

this “reverse incorporation” theory, Am. Compl. ¶¶ 89–96, and

the voluntary dismissal of one of the two construction

companies, Stipulation of Dismissal of Pl., ECF No. 53, the

parties filed cross motions for summary judgment. The district

court granted summary judgment to the District. Metro.

Washington Chapter v. District of Columbia, 578 F. Supp. 3d

7, 10 (D.D.C. 2021). The court found that the construction

workers lacked Article III standing because they failed to show

injury in fact from operation of the statute, id. at 14–15 (citing

Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)), but that

Metro Washington had associational standing, id. at 15–16

(citing Chamber of Com. v. EPA, 642 F.3d 192, 200 (D.C. Cir.

2011)). On the merits, the court ruled that the Privileges and

Immunities Clause is inapplicable to the District of Columbia

under Duehay v. Acacia Mutual Life Insurance Co., 105 F.2d

768 (D.C. Cir. 1939), and that “there is no basis upon which to

incorporate the Privileges and Immunities Clause into the Fifth

Amendment.” Metro. Washington Chapter, 578 F. Supp. 3d at

18. Metro Washington appeals.

5

II.

Metro Washington contends that the statute imposes

residence-based hiring requirements on contractors in violation

of the dormant Commerce Clause, the Privileges and

Immunities Clause, and the due process component of the Fifth

Amendment. In view of the parties’ contentions, we ask

whether Metro Washington has shown both constitutional and

prudential standing with respect to each of its claims. See

Mountain States Legal Found. v. Glickman, 92 F.3d 1228, 1232

(D.C. Cir. 1996).

Organized as a nonstock corporation under Maryland law,

Metro Washington is the “leading commercial[] construction

association” in the Washington, D.C., metropolitan area with

529 member organizations. Am. Compl. ¶ 4. Its membership

comprises “general contractors, specialty contractors,

construction industry . . . associates, and suppliers.” Id. Metro

Washington seeks judicial relief from injury not to itself but to

its members. It may do so in accordance with the constitutional

requirement of a case or controversy when “(a) its members

would otherwise have standing to sue in their own right; (b) the

interests it seeks to protect are germane to the organization’s

purpose; and (c) neither the claim asserted nor the relief

requested requires the participation of individual members in

the lawsuit.” Hunt v. Wash. State Apple Advert. Comm’n, 432

U.S. 333, 343 (1977).

To meet the requirement that it “identify at least one

member with independent standing to sue,” Flyers Rts. Educ.

Fund, Inc. v. U.S. Dep’t of Transp., 957 F.3d 1359, 1362 (D.C.

Cir. 2020), Metro Washington relies inter alia on the alleged

injury suffered by its member Miller & Long, Inc., a corporate

construction company that “regularly bids on work projects”

covered by the statute. Am. Compl. ¶ 5. Miller & Long can

6

bring this action in its own right based on its allegations that it

incurs increased administrative costs to comply with the

statute’s hiring and reporting requirements, which constitutes

injury in fact that would be redressed by a favorable decision.

See Ass’n of Am. R.R.s. v. Dep’t of Transp., 38 F.3d 582, 585–

86 (D.C. Cir. 1994); Lutheran Church-Mo. Synod v. FCC, 141

F.3d 344, 349 (D.C. Cir. 1998). See generally Lujan, 504 U.S.

at 560–61. The litigation is germane to Metro Washington’s

purpose of promoting hiring “based on individual merit and

performance” irrespective of a construction worker’s state of

residence, Am. Compl. ¶ 4, and the relief requested by Metro

Washington does not require participation by individual

construction companies, satisfying the requirements for Article

III standing under Hunt, 432 U.S. 333.

To the extent that Metro Washington rests its claim to

relief on the Privileges and Immunities Clause and the Fifth

Amendment, the District of Columbia disputes Metro

Washington’s prudential standing on the ground that the proper

parties to assert those rights are individual nonresident

workers. “[T]he source of the plaintiff’s claim to relief

assumes critical importance with respect to the prudential rules

of standing.” Warth v. Seldin, 422 U.S. 490, 500 (1975); see

also Clarke v. Secs. Indus. Ass'n, 479 U.S. 388, 400 n.16

(1987). “Ordinarily, a party ‘must assert [its] own legal rights’

and ‘cannot rest [its] claim to relief on the legal rights . . . of

third parties.’” Sessions v. Morales-Santana, 137 S. Ct. 1678,

1689 (2017) (quoting Warth, 422 U.S. at 499). “Th[is]

limitation,” the Supreme Court explained, “frees the [c]ourt . .

. from unnecessary pronouncement on constitutional issues”

and “assures the court that the issues before it will be concrete

and sharply presented.” Sec’y of State of Md. v. Joseph H.

Munson Co., 467 U.S. 947, 955 (1984) (quoting United States

v. Raines, 362 U.S. 17, 22 (1960)). It “assumes that the party

with the right has the appropriate incentive to challenge (or not

7

challenge) governmental action and to do so with the necessary

zeal and appropriate presentation.” Kowalski v. Tesmer, 543

U.S. 125, 129 (2004). Although the precedents are less than

pellucid about the scope of the “exception” to this rule, the

Court has sometimes allowed a litigant to assert the rights of a

third party when (1) “the party asserting the right has a ‘close’

relationship with the person who possesses the right” and (2)

“there is a ‘hindrance’ to the possessor’s ability to protect [its]

own interests.” Id. at 130 (quoting Powers v. Ohio, 499 U.S.

400, 411 (1991)).

Neither Metro Washington nor any of its identified

members possesses a right protected by the Privileges and

Immunities Clause. First, Metro Washington acknowledges

that both the association and its identified members (on whose

alleged injuries it relies) are corporations. Appellant’s Br. 7

n.21, 12. The Supreme Court has interpreted the Privileges and

Immunities Clause “not to protect corporations,” Tenn. Wine &

Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2460–61

(2019) (citing W. & S. Life Ins. Co. v. State Bd. of Equalization

of Cal., 451 U.S. 648, 656 (1981)), inasmuch as “[a]

corporation is not a mere collection of individuals capable of

claiming all benefits assured them by Section 2, Article IV, of

the Constitution,” Hemphill v. Orloff, 277 U.S. 537, 548

(1928). Second, the statute’s requirements apply equally to

contractors based in the District of Columbia and outside. See

D.C. Code § 2-219.01 et seq. Neither Metro Washington nor

its identified members can therefore claim the protections of

the Privileges and Immunities Clause based on their state of

residency. Because the Privileges and Immunities Clause

confers neither Metro Washington nor its identified members

with a right to challenge the statute, Metro Washington asserts

the rights of individual nonresident workers, who are third

parties not before the court. The nonresident workers who

initially filed the case were dismissed for a lack of injury in

8

fact, Metro. Washington Chapter, 578 F. Supp. 3d at 14–15,

and they have not appealed.

Yet Metro Washington does not attempt to show the

requisite “‘close’ relationship” or “hindrance” to surmount the

general bar on vicariously asserting the rights of third parties.

Kowalski, 543 U.S. at 130 (quoting Powers, 499 U.S. at 411).

In its opening brief, Metro Washington appears to disclaim any

argument that this case qualifies under an “exception” to the

rule against third-party standing. Appellant’s Br. 13. In its

reply brief, Metro Washington purports to speak in part “for the

rights of . . . the employees who comprise [its] members,”

Appellant’s Reply Br. 3, but it is construction companies, not

workers, who are Metro Washington’s members, Am. Compl.

¶ 4. Metro Washington does not identify any obstacle that

would hamper a nonresident worker’s “ability to protect his

own interests.” Kowalski, 543 U.S. at 130. Indeed, several

nonresident workers did participate in the district court

proceedings, although they did not appeal. Nor is this an

instance in which “enforcement of the challenged restriction

against the litigant would result indirectly in the violation of

third parties’ rights,” where the Court has “been quite forgiving

with the[] criteria” for asserting third-party standing. Id.

(internal quotation marks omitted); see June Med. Servs. LLC

v. Russo, 140 S. Ct. 2103, 2118–19 (2020) (plurality opinion)

(collecting such cases). See generally Curtis A. Bradley &

Ernest A. Young, Unpacking Third-Party Standing, 131 YALE

L.J. 1, 56–57 (2021). There is no suggestion that the statute

would be enforced against Metro Washington.

It is telling that the challengers in all the Privileges and

Immunities Clause cases invalidating “residence-preference”

laws that Metro Washington invokes were individual out-of-

state workers. In New Hampshire v. Piper, 470 U.S. 274

(1985), a Vermont resident who wished to practice law in

9

neighboring New Hampshire challenged a New Hampshire law

limiting bar admission to state residents. Likewise, the

plaintiffs in Hicklin v. Orbeck, 437 U.S. 518 (1978), were

individual workers considered non-Alaskan residents for the

purposes of the “Alaska Hire” law at issue. Indeed, in Toomer

v. Witsell, 334 U.S. 385 (1948), it was decisive that individual

shrimp fishermen residing in Georgia were among the

challengers to the discriminatory South Carolina law because

their co-plaintiff, a corporate association of fish dealers, was

found to be without standing, id. at 391. In each of those cases,

the challengers’ standing rested on the privileges-and-

immunities rights of nonresident workers. Accord. Lunding v.

N.Y. Tax Appeals Tribunal, 522 U.S. 287, 293 (1998); Austin

v. New Hampshire, 420 U.S. 656, 657 (1975); Doe v. Bolton,

410 U.S. 179, 184-85, 200 (1973); Blake v. McClung, 172 U.S.

239, 243 (1898).

This is also true of the only case identified by Metro

Washington that involved associational standing. In United

Building & Construction Trades Council v. Mayor & Council

of Camden, 465 U.S. 208 (1984), the Supreme Court clarified

that the Privileges and Immunities Clause binds municipalities

and remanded the case to the New Jersey Supreme Court to

determine whether the challenged city ordinance was

constitutional. Id. at 221. The challenger was an

unincorporated association of labor unions that sought to

invoke the privileges-and-immunities rights of out-of-state

workers who were members of the unions. Br. of Appellant at

*4–5, *5 n.10, Camden, 465 U.S. 208 (1983) (No. 81-2110).

Metro Washington’s membership, by contrast, is limited to

contractors, and it cites no authority exempting from the third-

party standing rule a corporate association that seeks to assert

the privileges-and-immunities “rights of its members’

employees.” Appellant’s Reply Br. 3 (emphasis added).

Anyway, Camden arose from state court, a context in which the

10

Court has relaxed its prudential standing limitations. See City

of Chicago v. Morales, 527 U.S. 41, 55 n.22 (1999) (plurality

opinion). Unlike here, “[w]hen a state court has reached the

merits of a constitutional claim, ‘invoking prudential

limitations on the respondent’s assertion of jus tertii would

serve no functional purpose.’” Id. (quoting City of Revere v.

Mass. Gen. Hosp., 463 U.S. 239, 243 (1983) (alteration

omitted)).

Whether the third-party standing rule is best viewed as

constitutional or prudential (and thereby waivable) is

immaterial here because the District has not waived its

challenge to Metro Washington’s standing to assert the

privileges-and-immunities rights of nonresident workers. See

Grocery Mfrs. Ass’n v. EPA, 693 F.3d 169, 179 (D.C. Cir.

2012); id. at 180 (Tatel, J., concurring); see also Lexmark Int’l,

Inc. v. Static Control Components, Inc., 572 U.S. 118, 127 n.3

(2014). Contrary to Metro Washington’s suggestion, the

District raised the third-party standing objection in its motion

to dismiss, Def.’s Mot. to Dismiss 16–17, ECF No. 6, thereby

preserving its argument in view of the possibility that the

individual workers would be dismissed from the action, see id.,

and the district court noted the preservation of this issue, Metro.

Washington Chapter, 57 F. Supp. 3d at 20 n.9.

Metro Washington’s substantive due process claim

invokes “the same” privileges-and-immunities right held by

nonresident workers. Appellant’s Br. 28. In support of its

“reverse-incorporation” theory, Metro Washington maintains it

is a “necessity” that the Privileges and Immunities Clause and

the Due Process Clause of the Fifth Amendment provide “a

uniformity of protection.” Id. Indeed, Metro Washington

begins its substantive due process argument by urging this

court to recognize that “the rights protected by the [Privileges

and Immunities] Clause should be protected in the District for

11

nonresidents and residents alike,” id. at 26, and to adopt a

uniform standard such that the “same rights are protected . . .

under one standard,” id. at 28. Metro Washington did not

allege in its amended complaint, nor argue in this court, that

corporations may have direct rights under its theory of reverse

incorporation. Consequently, Metro Washington’s prudential

standing theories to bring the Privileges and Immunities Clause

claim and the Due Process Clause claim must stand and fall

together. For the reasons discussed, the Privileges and

Immunities Clause confers neither Metro Washington nor its

identified members with a right to challenge the statute.

Because the protections of the Privileges and Immunities

Clause and the putative Fifth Amendment privileges-and-

immunities right must be coextensive on Metro Washington’s

theory, its members likewise possess no substantive due

process right that is infringed by the statute.

Given that Metro Washington’s Privileges and Immunities

Clause and substantive due process claims run afoul of the

general rule against third-party standing, this court need only

address the merits of its dormant Commerce Clause challenge.

“[T]he cardinal principle of judicial restraint — if it is not

necessary to decide more, it is necessary not to decide more —

counsels us to go no further.” PDK Labs., Inc. v. U.S. Drug

Enf’t Agency, 362 F.3d 786, 799 (D.C. Cir. 2004) (Roberts, J.,

concurring in part and concurring in the judgment).

III.

Turning to the merits, this court reviews de novo the

district court’s dismissal of Metro Washington’s dormant

Commerce Clause claim, see Sissel v. HHS, 760 F.3d 1, 4 (D.C.

Cir. 2014), “apply[ing] to local legislation of the District [of

Columbia] the same interstate commerce analysis as [it] would

to state laws,” Milton S. Kronheim & Co. v. District of

12

Columbia, 91 F.3d 193, 198 (D.C. Cir. 1996) (citing Electrolert

Corp. v. Barry, 737 F.2d 110 (D.C. Cir. 1984)). The

Commerce Clause operates as “an implicit restraint on state

authority, even in the absence of a conflicting federal statute.”

United Haulers Ass’n v. Oneida-Herkimer Solid Waste Mgmt.

Auth., 550 U.S. 330, 338 (2007). In this “negative aspect,” the

Commerce Clause “prohibits economic protectionism — that

is, regulatory measures designed to benefit in-state economic

interests by burdening out-of-state competitors.” Fulton Corp.

v. Faulkner, 516 U.S. 325, 330 (1996) (internal quotation

marks omitted). But “when a state or local government enters

the market as a participant it is not subject to the restraints of

the Commerce Clause.” White v. Mass. Council of Constr.

Emps., Inc., 460 U.S. 204, 208 (1983). In upholding an

executive order of the Boston mayor that required at least half

the workers to be Boston residents on all construction projects

funded in whole or in part by city funds, the Court concluded

that Boston was acting as a market participant and was

therefore unconstrained by the dormant Commerce Clause. Id.

at 214–15. This “market-participant exception reflects a basic

distinction . . . between States as market participants and States

as market regulators,” grounded in the recognition that “the

Framers’ distrust of economic Balkanization was limited by

their federalism favoring a degree of local autonomy.”

Kentucky v. Davis, 553 U.S. 328, 338–39 (2008) (internal

quotation marks omitted) (citing THE FEDERALIST NOS. 7, 11

(Alexander Hamilton), NOS. 42, 51 (James Madison)).

Metro Washington maintains that the statute violates the

dormant Commerce Clause because its employment

requirements discriminate against non-D.C. residents and

impermissibly burden interstate commerce. Metro Washington

does not challenge the statute as applied to any particular

project on which one of its members is the contractor; nor does

it identify any individualized characteristics of its members that

13

would render unconstitutional the statute’s application to them

in particular. See, e.g., Sabri v. United States, 541 U.S. 600,

609 (2004). Rather, Metro Washington attacks the statute as

facially invalid under the dormant Commerce Clause and seeks

to have the statute declared unconstitutional in all possible

applications and its enforcement enjoined as to any person.

Appellant’s Br. 39; Am. Compl. 38.

To prevail in its facial attack, Metro Washington must

show that the statute unjustifiably burdens interstate commerce

“in all of its applications.” Wash. State Grange v. Wash. State

Republican Party, 552 U.S. 442, 449 (2008) (citing United

States v. Salerno, 481 U.S. 739, 745 (1987)); see also Rancho

Viejo, LLC v. Norton, 323 F.3d 1062, 1077–78 (D.C. Cir. 2003)

(applying Salerno to a Commerce Clause challenge). “A facial

challenge to a legislative Act is . . . the most difficult challenge

to mount successfully, since the challenger must establish that

no set of circumstances exists under which the Act would be

valid.” Salerno, 481 U.S. at 745. Metro Washington fails to

carry its burden to show that the statute violates the dormant

Commerce Clause in all of its applications. The statute applies

to “government-assisted project[s] or contract[s],” a term that

covers public projects in which the District expends its funds

to purchase goods or services, D.C. Code § 2-219.01(5), and

the District identifies numerous such public-funded

construction projects. Appellee’s Br. 39–40. There, the

District of Columbia is undoubtedly acting as a “market

participant” under White, 460 U.S. at 208, and the dormant

Commerce Clause is no barrier to imposing worker-residency

requirements in those circumstances. “[A] facial challenge

must fail where,” as here, “the statute has a plainly legitimate

sweep.” Wash. State Grange, 552 U.S. at 449 (internal

quotation marks omitted).

14

Metro Washington’s view is that White does not control

because the statute is applicable to projects other than those

directly funded by the D.C. government. True, the statute

“can” theoretically be enforced against the contractors on

projects not involving the direct expenditure of public funds,

Appellant’s Br. 30, such as those to which the government

provides a tax abatement or administers a federal grant, D.C.

Code § 2-219.01(5). But “[t]he fact that the . . . Act might

operate unconstitutionally under some conceivable set of

circumstances is insufficient to render it wholly invalid, since

[the Court] ha[s] not recognized an ‘overbreadth’ doctrine

outside the limited context of the First Amendment.” Salerno,

481 U.S. at 745. Metro Washington has failed to identify

particular projects with D.C. government involvement so

attenuated as to disqualify it as a market participant and, “[i]n

determining whether a law is facially invalid,” the court “must

be careful not to go beyond the statute’s facial requirements

and speculate about ‘hypothetical’ or ‘imaginary’ cases.”

Wash. State Grange, 552 U.S. at 449–50) (citing Raines, 362

U.S. at 22). Metro Washington’s contention invites precisely

that form of forbidden speculation on a “fact-poor record[].”

Sabri, 541 U.S. at 609.

Accordingly, the court as a matter of law affirms the

district court’s Rule 12(b)(6) dismissal of Metro Washington’s

dormant Commerce Clause claim and Rule 12(c) dismissal of

the Privileges and Immunities Clause claim. The court also

affirms the district court’s grant of summary judgment to the

District of Columbia on the inapplicability of the Privileges and

Immunities Clause to a corporation. Further, although Metro

Washington has Article III standing as an association, it lacks

third-party standing to raise its alternative Privileges and

Immunities claim based on incorporation through the Fifth

Amendment, and therefore the court dismisses this alternative

contention.